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Home > Markets > Sterling Monetary Framework
 

Sterling Monetary Framework

The Bank's operations in the sterling money markets have two objectives, stemming from its monetary policy and financial stability responsibilities - to implement the Monetary Policy Committee's decisions in order to meet the inflation target; and to reduce the cost of disruption to the liquidity and payment services supplied by banks to the UK economy. These facilities are set out in part 2 of the 'Red Book':

Part 2 - The operations currently used in the Sterling Monetary Framework 

The Bank has published a 'Sterling Monetary Framework: Annual Report 2013–14'. This is the first in a new series of annual reports, designed to throw light on the operation of the Bank’s published framework for implementing monetary policy and providing liquidity to the banking system. The Report draws on the views of internal and external stakeholders to identify areas where the SMF works well, and areas where it might be improved. It is available at:

Sterling Monetary Framework: Annual Report 2013-14

When Bank Rate was reduced close to zero in March 2009, the MPC's instrument of monetary policy shifted towards the quantity of money provided rather than the price at which the Bank lends or borrows money. This resulted in a number of changes to the Sterling Monetary Framework (SMF) detailed in the document below:

Market Notice: Sterling Monetary Framework
Effective 6 August 2009

The table in the document below summarises the operations currently undertaken by the Bank, including some of the operational parameters:

Summary of current Bank of England's operations in the sterling money markets

Latest information

Developments in the Bank's approach to liquidity insurance
Latest SMF Operational Announcements
Number of SMF participants